Viva Mexico! Viva!

With a population of 120 million people, Mexico is the Latin America’s second largest economy (growth of 2.5% in 2015). The country who is “so far from god and so close to the US” according to Porfirio Diaz, knew how take advantage of its strategic position when we are talking about Fintech.

Personally, I thought that being so close to the US could corrupt the startup culture in Mexico opting for the easy path and doing copy/paste of American solutions. I am happily surprised that it is not the case. Mexico has a tradition of innovation and creativity along its history and its entrepreneurs pulled out solutions from its own culture and reality to solve latent problems. So let’s roll out the carpet for Fintech.

In Mexico, 60% of population is unbanked and only 20% have a credit card. Fintech appears as the best solution to finally solve the unbanked issue. In a country where cash is dominant and people prefer to save money under the mattress, banks had real difficulties to get them on board. Fintech companies have great challenges in front of them: educate the unbanked people about financial services and give them confidence using technology.

In order to help them in this mission, several initiatives were created by international programs, accelerators and incubators. For example, Village Capital and Accion Venture Lab partnered with Mastercard Center for inclusive growth, Pomona Impact and United IT Consultants created a program to support entrepreneurs making financial services more affordable and accessible for Mexicans who lack access to traditionalU financial services. This program of three months started in 2015 and recruited 12 ventures. At the end of the program, two peer-selected enterprises received USD 50.000 in investment each. The winners last year were:

  • BillPocket: a payment facilitator for more than 5.500 Mexican merchants using their mobile points of sale.
  • Credilikeme: an online lending platform that uses facebook to reach, analyze and engage borrowers.

The inscriptions for this year were already closed and we are waiting to know the selected startups.

Accion Venture Lab is an investment initiative that provides seed capital and support to innovative financial inclusion start-ups improving financial access for people living in poverty worldwide. In his current portfolio, there are 4 Mexican startups:

  • Clip combines a card reader plug-in for smartphones with innovative back-end risk management platform to enable nearly any merchant in Mexico to accept credit cards.
  • Konfio is an online lending platform that uses innovative credit algorithms an alternative data analysis to help microbusinesses in Mexico who do not have access to credit obtain affordable working capital loans.
  • Salud Facil offers low income customers access to affordable credit to cover their healthcare and medical costs in Mexico.
  • Quippi aims to replace high priced traditional remittances to families in Mexico with PIN-based gift cards redeemable at local retailers (grocers, clothing stores, convenience stores…).

Fintechs also saw opportunities in the recurrent problems that Mexicans living in the US face sending remittances to the country. These solutions demand work and involvement in both countries. This is a door opened for Americans to be involved in the solutions, as partners or investors for example.

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Clip at the Venture Capital Conference – Alianza del Pacífico

 

BBVA, the bank that “embraces the disruptive power of Fintech” is present in Mexico and through its BBVA Innovation Center, or #Piso33, it organizes events to boost innovation and technology in the Mexican Community. BBVA Bancomer has disrupted the financial services market in the country with the launching of several digital products first (digital wallet or hiring car insurance through an app).

On September 2015, the Finnosummit took place in Mexico for the second year. 350 participants of the Fintech community attended to explore with the 25 international speakers the future of the Fintech industry. The final of the BBVA Open Talent in Latin America occurred during this event with 12 finalists, among them there were some Mexican ones:

  • Openpay has an API that allows companies to accept and end payment to clients and vendors through internet and mobile phones.
  • ZaveApp helps you to reach your goals saving money without thinking about. You save without fees, easy, quick and fun.

On 20/09/2016, we will have the third edition of the Finnosummit at Mexico City. For more information, you can click here.

This year, Innotribe announced its first partnership with SWIFT’s Latam Regional Conference (LARC) to harness innovation happening in the region. The event will be organized in Mexico City from 28-29th june 2016.  Innotribe will select 12 startups to enter the startup challenge, showcase their products at the event and receive expert coaching and mentoring. The three finalists will attend the SWIFT’s annual global financial services conference, held in Geneva where they will share the stage with Fintech experts and representatives from leading financial institutions worldwide. For more information please click here.

If we talk about Fintech, we cannot ignore bitcoin and blockchain, the technology that is disrupting banks. In December 2015, the laBITconf took place in Mexico DF, gathering more than 300 attendants and 40 international speakers as Andreas Antonoupoulos and José Rodríguez, from Bitso, bitcoin pioneer in the country. Bitso is a Mexican bitcoin exchange that has recently acquired Unisend Mexico in an attempt to become the leading bitcoin exchange in the country. The conference shows the involvement of Mexico in the international ecosystem of digital currencies. Bitcoin seems very promising as a solution for the Mexico’s remittance market and cross border payments.

To consolidate all the initiatives and activities happening in the country, in October 2015 the Mexican association of Fintech, “FINTECH México”, was created. This association intends to create a collaborative environment boosting innovation and also union in front of important actors of the ecosystem as regulators and big companies. With a focus on 5 key areas (education, technology, research, regulation and networking), they plan to make the Mexican Fintech community stronger locally and internationally. This week, the association was awarded as one top brand influencer at the Innovate Finance Global Summit 2016.

At the Venture Capital conference of the Alianza del Pacifico in March 2016, Mexico congratulated and encouraged for more work of the four countries (Chile, Colombia, Mexico and Peru) to attract more investments in the region. After all, the four countries together have a bigger market than Brazil.

Today, there should be more than 100 Fintech companies in the country but this number should grow quickly (in 2020, 63% of mobiles in the country will be smartphones). Mexico brings an ocean of opportunities for digitalization and innovation in financial services that we expect to really change the financial landscape of the country.

Mexico is “so close to the US” (easy access to US knowledge of Fintechs, international American speakers/influencers go easily to its territory, interest of American investors…) but above all is a Latino American country so he can play a leading role in the spanish speaking community.

We expect to hear more about Fintech Mexico activities and successful histories, especially related to financial inclusion. Because as Cristine Lagarde, IMF secretary, said once “Mexico can become the inspiration for the rest of the world to “dare to dream.””

 

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Colombia and its wildest imagination

Colombia is famous for its salsa dance, its coffee and is considered one of the happiest countries in the world. Some weeks ago, it was also recognized as one of the fintech entrepreneurship hubs in Latin America. Indeed, Colombia has recently worked to build a technological and innovative environment to boost the creation of startups and of course fintech.

The country has a solid economy with a growth above 3% for 2015 and a better estimation for 2016. By 2015, it became the 4th largest economy in Latin America. Some years ago, the government decided to invest in developing the technology and innovation sector, setting up the country as one of the region’s strongest. The ambition is high with challenging goals. By 2018, the government expects to have 63% of the country connected to broadband. And according to 2015 GSMA figures, out of a population of 48.6 million people, there are 26.1 million users of internet in the country and 51 million mobile connections. Tom Phillips, Chief Regulatory Officer from GSMA, states that Colombia is one of the fastest growing mobile markets in Latin America. The Colombian government has also launched the “Vive Digital” program to make internet accessible to the poorer households. As part of this program they developed the App.co program to build an entrepreneurial ecosystem in the country. App.co has already taught 50,000 people how to code. For 2018, it is planned to reach 90,000 people. In 2010, 10% of small companies had access to internet. In 2015, 60.6% of small companies do online transactions for their business (source datexco). Moreover, several private and governmental organizations emerged to educate and provide support to Colombian entrepreneurs, as for example Innpulsa, RutaN, la corporacion Colombia digital. The effort has paid and Colombia was considered by the world economic forum as one of the leaders on entrepreneurial ambition and innovation.

Big companies contribute to the entrepreneurial and innovative development of the country too. Talking about Fintech, BBVA Bank is one of the most active actors in the ecosystem. The Spanish bank has opened its first center of innovation in Bogota. This space presents the last innovations of the bank in technology and also organizes opened events related to entrepreneurship and digital technology. The bank is an unconditional worldwide supporter of fintechs. Every year, the BBVA organizes the BBVA open talent in three parts of the world: Latin and Central America, Europe and North America. This is a competition where the bank looks for innovative projects, products or beta-versions related to Financial Services (i.e. Big Data, security, e-commerce…). The winners participate in a 2 weeks program to meet high net worth people from technology and finance and executives of the bank. The goal is to start developing a project with the bank where both parts are winners. In the last edition, 180,000 euros were distributed among the 6 winners. In the South and Central America 2015 session, there were 196 participants and Colombia was the most represented country with 57 applications. For more information about the 2016 session, please click here.

On February 16th 2016, the Finnosummit event occurred in Bogota to discuss about Fintech in Latam. The main topics discussed during the event were Fintech opportunities and innovation, financial inclusion, blockchain and regulation. The Finnosummit event is organized by Finnovista, an international organization that accelerates the development of startups focused on digital financial services and empowers the fintech ecosystem worldwide. 260 people attended the event gathering entrepreneurs, investors, financial entities, consultants and organizations of development from all Latin America. During the conference, the Finnosummit challenge took place: a pitch competition among 9 fintechs previously selected by Finnovista. The winners were Aflore and Alegra. Let’s keep them in mind because they promise to be great actors in the Latin American ecosystem.

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Aflore: is a different type of financial services company. It makes loans accessible to the unbanked middle class through a network of informal financial advisors who people already know and trust. The contact between the lenders and the borrowers is performed through a technological platform. The company has already been awarded with several local and international prizes.

Alegra: is a software for small and medium companies to manage their accounting and invoicing through the cloud. The purpose of the startup is to beneficiate the small companies to take control of their finances. The startup is already present in Chile, Peru and Ecuador and they plan to reach other Latin American countries and the US soon.

Colombia had some exit stories too and the one in Fintech is Pagosonline.com. This startup is the Paypal of Colombia, leading the electronic payment service in the region. In 2011, the company was acquired by the multinational group Naspers, one of the major global players in electronic commerce and owner of a worldwide network of online payments platform called Payu Group. PagosOnline became Payu Latam and is planned to be the largest payment platform in Latin America (already present in Mexico, Peru, Brazil, Chile, Argentina, Panama and Colombia).

There are several activities of Fintech happening soon in Bogota, stay tuned:

  • On March 2nd 2016, there will be a conference about blockchain and digital transformation led by Digital Bank at Hotel Cosmos Bogota. For more information, please click here.
  • On March 3rd 2016, the Innovation Center of BBVA is organizing a tour with the Ministry of Innovation and technology, where the bank will share with the attendants its digital strategy and his work with the fintechs. For more information, please click here.
  • On May 25th 2016, Digital Bank Latam will organize the annual fintech meeting, where more than 300 attendants will discuss about the latest innovation in Latam on technology, payments and financial services. For more information, please click here.

The government, banks and private organizations have a clear goal: to boost innovation and fintech for everybody in the country. Today, 35% of the adult population in Colombia is unbanked and all the actors are working to reach them, not just investing in knowledge and knowhow but also in infrastructure.

New projects are now focused on identifying local and international investors and convincing VCs and seeds investors to settle in the country. Colombian startups have a lot of potential because they do act local but they become Latino American actors very quickly. Why not become global too?

Gabriel Garcia Marquez, famous Colombian writer said “It always amuses me that the biggest praise for my work comes for the imagination, while the truth is that there’s not a single line in all my work that does not have a basis in reality. The problem is that Caribbean reality resembles to wildest imagination”.

From the wildest imagination, we can certainly expect disruptive ideas. With so many initiatives going on, the Colombian fintech cannot disappoint us. Colombia seems ready to defend a leadership position in the Latin American Fintech arena.

 

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Nurturing Argentinean innovators

On January 4th, 2016 the Financial Times wrote an article about the switching positions between Argentina and Brazil. The two biggest economies of South America apparently are changing chairs. Argentina lives a great moment now. The new president Macri plans to revive the national economy and with that regain the trust of creditors and investors. On the other hand, Brazil is living a difficult situation with a weak economy and political scandals. The scenario is not pretty at all with an expected inflation of 11% and an expected growth of -2% for 2016. However, while some people cry, others sell handkerchiefs. With this optimism, Brazilian startups ecosystem tries to figure out the opportunities that the current economy can provide and bring innovative solutions to alleviate consumer life.

But this time, I would like to talk a bit about Argentina. After all, it is the country that currently has a huge attention from the international community.

I am pleased to know that despite a slow economy these last years, the Argentinean startup ecosystem tried to evolve. Regarding Fintech, international initiatives took place in the country with the support of local players and even the government.

On May 2015, the Finnovista Pitch Day gathered the Argentinean fintech community to present 5 startups and their disruptive services. This event allows attendants to meet investors, professionals from the financial services environment and other Fintech startups. The 5 start-ups selected to pitch this year were:

  • $ero: independent issuer of electronic money, using mobile technology (www.sero.uy)
  • Kardyt: online trading of credit cards for bank and retailers
  • Invertir.la: mobile app to invest in the Latin American Stock Exchange, increasing the access to more financial products (www.invertir.la)
  • Mondome: comparison tool of the traditional remittances methods with bitcoin transactions in order to send money abroad with the best price (www.mondome.com)
  • Motormax: platform specialized in the research of financing through internet to buy a car (www.motormax.la)

The 7th edition BBVA Open Talent 2015, gathered 652 participants with 193 Latin American entries. Among them, there was one Argentinean finalist, wayniloans. Wayniloans is the first community of loans between individuals with bitcoin technology in Latam (peer-to-peer). It gives more access to credit for the lender and increase the savings for the investors. (www.wayniloans.com)

NXTP Labs, the most active early stage tech investor in Latin America, settled in Buenos Aires, launched its first Fintech accelerator program with 12 startups selected from Argentina, Chile, Ecuador and Uruguay.

In the second week of December, FinTechstage Buenos Aires took place with 400 attendants and gathering personalities from the Argentinean Finance environment but also international speakers to bring together a group of financial innovators ready to debate about the challenges and opportunities of Fintech in Latin America. The conference treated several themes as blockchain, innovation in banks, acceleration of fintech startups, cibersecurity and finance inclusion. Personally, I do believe that the latter has a great potential in Latin America, considering that roughly 50% of adults (Latin America and the Caribbean) remain outside the formal financial system. Let’s remember that the unbanked population generated innovative solutions in Africa, boosting the Fintech environment and creating worldwide benchmarks. In addition to the panels and the networking sessions, the event showcased a pitch competition among the participants of the Fintech Accelerator Program run by NXTP Labs. The winners were:

  • BitCourt, from Argentina: A platform to create, notarize and digitally sign contracts between parties using the blockchain technology (www.bitcourt.com)
  • Olly, from Chile: A smart turn on / off credit card app that prevents fraud and gives you full control over your transactions (www.getolly.com)
  • Pagos de Última Milla, from Argentina: A B2B payment hub (www.flexibility.com.ar)

Several initiatives were listed in this text showing that the future of the country is very encouraging. Mariano Mayer, representative of the Argentinean Production Ministry, said at the FintechStage Buenos Aires: “we need entrepreneurs to create innovation. Argentina needs to grow; to grow it needs to change, and for that, we need you”.

I will also recognize the active participation of the local and international banks in the country. They are organizers of events, attendants, mentors, speakers, investors and partners. When all the groups work together, incredible results emerge. The Argentinean Fintech community had a nice 2015 and we are confident that 2016 will be much better…

Ricardo Linier's Cartoon

Ricardo Linier’s Cartoon